Tax Structure and Female Labour Market Participation: Evidence from Ireland

31 Pages Posted: 7 Nov 2007

See all articles by Tim Callan

Tim Callan

Economic and Social Research Institute, Ireland; IZA Institute of Labor Economics

Arthur van Soest

Tilburg University; Netspar; RAND Corporation; Institute for the Study of Labor (IZA)

John R. Walsh

Economic and Social Research Institute, Ireland

Date Written: October 2007

Abstract

How great an effect does the structure of income taxes have on women's labour market participation? This issue is investigated using a discrete choice static labour supply model for married couples in Ireland. The model incorporates fixed costs of working and simultaneously explains participation decisions and preferred hours of work. Details of the tax system are fully incorporated, and key elements of the welfare system are also taken into account. The model is estimated using data from the 1994 wave of the Living in Ireland Survey. The results are used to analyse the labour supply effects of a move to greater independence in the tax treatment of couples. The influence of tax structure on participation is reconsidered in the light of trends in women's participation in the labour market and two key changes in the structure of taxation: a shift from a joint or aggregated basis of assessment to an "income-splitting" system in 1980 and a further substantial shift from income-splitting towards greater independence from 2000 onwards.

Keywords: labour supply, discrete choice, micro-simulation

JEL Classification: H31, J22

Suggested Citation

Callan, Tim and van Soest, Arthur H. O. and Walsh, John R., Tax Structure and Female Labour Market Participation: Evidence from Ireland (October 2007). IZA Discussion Paper No. 3090, Available at SSRN: https://ssrn.com/abstract=1027897

Tim Callan (Contact Author)

Economic and Social Research Institute, Ireland ( email )

4 Burlington Road
Dublin 4
Republic of Ireland

IZA Institute of Labor Economics ( email )

Bonn, D-53072
Germany

Arthur H. O. van Soest

Tilburg University ( email )

P.O. Box 90153
Tilburg, DC Noord-Brabant 5000 LE
Netherlands

Netspar

P.O. Box 90153
Tilburg, 5000 LE
Netherlands

RAND Corporation ( email )

P.O. Box 2138
1776 Main Street
Santa Monica, CA 90407-2138
United States

Institute for the Study of Labor (IZA)

P.O. Box 7240
Bonn, D-53072
Germany

John R. Walsh

Economic and Social Research Institute, Ireland ( email )

Dublin 4
Ireland

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